South African startup Yellow, which enables low income, rural households in Malawi and Uganda to access electricity through solar home systems on a financed basis, plans to move into other verticals after raising a US$3.3 million Series A funding round.
Founded in 2018 by Mike Heyink and Maya Stewart, Yellow is a digital retail business currently focused on access to energy, and has provided power on a pay-as-you-go (PAYG) basis to 30,000 homes in its two markets.
“Access to energy and infrastructure is a huge challenge in rural Malawi and Uganda. By incorporating digital tools with a network of agent entrepreneurs and working with mobile money platforms as a means for receiving payment, we were able to reach the last mile customer in a cost-effective manner allowing the company to serve even the most remotely located household where other SHS PayGo operators can’t,” Heyink told Disrupt Africa.
Growth has been exponential.
“We are sometimes unable to keep up with demand. We have sold over 30,000 solar home units to date, and sell approximately 200 units daily,” said Heyink.
The company recently announced it closed a US$3.3 million Series A round in May, with investment coming from Platform Investment Partners (PIP), Ruby Rock Investment and previous investors LBOS. This will be used to scale-up its footprint to over 100,000 customers in Malawi and Uganda, but also to move into new verticals.
“We are expanding our product offering with uniquely sourced value products. We feel confident differentiated products relative to what is available in the existing market will be well received. Ultimately, we hope to capitalise on the massive growth in the addressable African consumer base which is set to double over the next 20 years,” said Heyink.
“We want to initially expand our product offering over and above SHS – we have begun offering low voltage plasma TVs, smartphones on PayGo packages, and have ambitions to further expand this. In unison, we are expanding geographically within both countries. Expansion into different markets is a medium-term plan.”
Yellow generates revenue from monthly payments for the PayGo packages, as well as cash payments for cash sale items.
“We are expanding rapidly and so much of the profit is being reinvested into the business to grow our product and support bases,” said Heyink.
It hasn’t been an easy journey for the startup, however, with Heyink saying that the creation of a sustainable model had been its biggest challenge since it launched.
“Initially, we sat for hours under trees with chiefs and drove through hundreds of places that aren’t on maps. We gained almost no traction at all and after a year of leaving our jobs came close to shutting the business down,” he said.
“Over time, we learnt that the informal channels which make up 90 per cent of African retail lack the sophistication required to get complex products and services to customers. We knew we had to radically change the way things were being done, if we were going to reach a price that people could afford.”
That was when it started building Ofeefee, its digital platform for informal retail.
“The platform changed everything. The business developed huge traction. We substituted meetings under trees for automated recruitment workflows and soon the business was thriving,” Heyink said.
Now, with funding in the bank, the plan is for Yellow to thrive even more, in more verticals and additional geographies.